Thursday, December 30, 2010

Innovation Role: The Jester

Over the last few days I've been writing about the different roles, or "hats", that innovators must play.  I've talked about the role of the Matador, anticipating the bulls who protect sacred cows.  I've written about the need for the Futurist, to encourage people to think longer term.  I wrote yesterday about the Tinkerer, who must convert virtual ideas into tangible artifacts for prospects and consumer to understand.  Today I want to talk about another role, and I've struggled with the title.  Basically it came down to either "the jester" or "the therapist" and I went with "the jester" because I thought it sounded more interesting.

Today's role is probably the most important and the most difficult to perform well.  Innovation, as you know by now, is in high demand from the executive suite.  Innovation, conversely, is very difficult to implement in the bowels of most organizations, regardless of the demands of the executive suite, because there's a gap in understanding, commitment and resources between what's asked for and what's funded.  Asking for innovation without providing funding and resources is worse than useless - it's cynical.

So here's where the role of the Jester comes in.  As an innovator, you must often help executives and managers understand the implications of what they request.  Jesters in ancient courts were the people who could question the kings pronunciations without the risk that other courtiers faced.  They could tell the king that he wore no clothes.  Often, in many firms considering innovation efforts, the innovation lead must tell the executive team that their pronouncements wear no clothes - merely asking for innovation without changing the compensation and evaluation schemes, or asking for innovation without resourcing the effort, or asking for innovation without increasing a tolerance for risk, these reflect either a lack of understanding about the undertaking or a cynical, short term ploy to play to what the street wants to hear.  Let's assume that most of the communication in genuine - executives actually want innovation.  Then, it's the role of the innovation lead to demonstrate the implications of that expectation.  In other words, the innovator needs to "speak truth to power" and demonstrate the commitments, investments and risk tolerances necessary for innovation to succeed.

Now, with just a little bit of thought much of this should be obvious, which is why this role is really an amalgam between a jester and a therapist.  One could argue that the executives know that more resources, more investment and more commitment are vital for the success of innovation, but they are in "denial".  They want the benefits but don't want to commit the necessary resources.  What happens then is that a Potemkin village is erected.  As you know, the old saying from the Communist era still applies - you pretend to pay us and we'll pretend to work.  The modern equivalent is:  you pretend to fund innovation, and we'll pretend to innovate.  There are a significant number of firms talking about innovation today, which are really Potemkin villages of innovation - there for the compliant media to applaud, but not creating anything of value.

As an innovator in most firms, it will inevitably be the case that you will have to confront high expectations with limited resources.  You can take the "jester" approach and demonstrate the actual requirements for innovation to succeed, or you can take the "therapist" approach and help the executives through their denial, but either way you'll have to achieve more commitment, resources and investment than the executives establish initially.  You can choose to create a Potemkin village, recognizing that little of value will be created through your innovation efforts and more people will become frustrated with the limited efforts or you can choose to demand the resources, funding and commitment necessary to achieve what the executives expect.  Understand the real underlying goals and work accordingly.
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posted by Jeffrey Phillips at 7:29 AM 4 comments

Wednesday, December 29, 2010

Innovation Roles: The Tinkerer

If you are joining us mid-stream, I'm writing a series of articles describing the many "hats" that innovators must wear.  In recent posts I've written that an innovator must sometimes be a Matador, anticipating the reaction of the old bulls when you attack the sacred cows.  I've also written that innovators at times must be futurists, decoding trends and understanding how the future will unfold.  Today we'll look at another role that innovators must be able to fill:  the Tinkerer.

What's interesting about this role is that it is often downplayed or misunderstood, much to the detriment of good ideas.  Creating a rough prototype and constantly improving that prototype based on internal and external feedback is the essence of innovation, yet very few firms do this work effectively, if at all. 

Think about Edison for just a minute.  While we have these ideas of Edison as a lonely inventor with flashes of brilliance, that's not exactly how it played out.  Edison was in fact a Tinkerer, and structured his work and his teams to prototype constantly.  His labs at Menlo Park incorporated the latest technologies from several different industries - mining, telegraph, electricity, railroads and others - to ensure cross-fertilization of ideas and concepts.  He encouraged his team to actively prototype ideas to test hypotheses and to learn from successes and failures.

Edison is considered one of the most prolific innovators, and he relied heavily on the concept of rapid prototyping to test ideas.  From those prototypes he learned what would work, and more importantly, what was relevant and valuable to consumers.

As businesses grew, specialization took over and many firms lost the experimentation and prototyping instincts due to a reduction in variances.  Mass production required increasingly efficient lines to create very similar products in large quantities, so much of the prototyping and experimentation moved to the R&D labs, and eventually out the door entirely.  Few firms today have the willingness to create rough prototypes, expose them to consumers for feedback and incorporate those learnings quickly in the final product.  That means that innovators must take on that task themselves.

Good innovators must be tinkerers, building rough and inexpensive prototypes of their ideas to share first internally, then externally to validate the idea and determine the relevance and value to customers.  Innovators that engage customers in this iterative process will learn more, innovate faster and risk far less than other firms that ignore the need for prototyping and tinkering.  Unfortunately prototyping and tinkering are not skills that are widely distributed or well-established in most organizations, so innovators will need to take on these tasks themselves.

Testing ideas by creating rough prototypes will add immense value at fairly low cost, yet this activity has a "craft" or ad hoc feel that doesn't seem to align to modern businesses, much like other important innovation activities like ethnography.  These activities are art, not science, so they don't fit well in corporate America, but are vital to the innovation process.
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posted by Jeffrey Phillips at 6:22 AM 3 comments

Tuesday, December 28, 2010

Innovation Roles: The Futurist

Yesterday I began a short series of posts about the different roles that innovators play.  There are several different and competing roles that any good innovator must assume, and understanding when and where to assume the roles is vitally important for success.  Yesterday we argued that occasionally an innovator must become a Matador, able to work with the dangerous bulls that protect sacred cows.  Matadors have to be quick on their feet and anticipate the bulls' moves in advance.

Today we'll look at another role an innovator must play:  the futurist.  Innovation, like it or not, is all about the future.  Any good manager can look a day, a week or a month into the future and be reasonably certain of an accurate forecast.  That's because they'll assume little change in the environment or operations.  However, real innovation doesn't get implemented and have impact over such a short time frame.  Innovation is about quarters at a minimum, and typically is focused on years.  Most people blanch at trying to make any predictions beyond a few quarters, and very few have any comfort trying to anticipate the future over several years.  Yet that's what innovation is all about.  The future.

There are several reasons for this, but the two most important reasons are 1) your commercialization cycle and 2) the shifting demands and expectations of customers.  In the first case, it takes a reasonable amount of time to generate an idea and commercialize it - anywhere from several quarters to several years, depending on the industry.  That means if you identify a problem to solve today and have a really interesting new idea to present to the market, it may be years before the idea is commercially available.  That means you need to solve problems in context of the timeframes when you can deliver the new product or service.  In the second case, customer requirements, expectations and demands are constantly shifting.  Usually they shift slowly over time, then rapidly as a new technology, experience or offering becomes commonplace. Then they shift slowly until a critical mass builds up, then shift quickly again. 

Both of these phenomenon mean that as an innovator, you need to become an expert on the future of your industry, your firm and your clients' needs.  Only then can you successfully innovate and reap the rewards of your work.  This is lonely, uncertain work, since the vast majority of the people in your organization will want to stick to no more than a quarter at a time.  That's relatively certain and measurable.

As a futurist, however, you need to open the book of the future and explain the stories that are there to be read and understood.  You may need to write those stories that outline how the future may unfold and your firm's role in that future.  You may be laughed at, ridiculed or ignored, so it's helpful to investigate deeply and make some reasonably correct predictions.  Your firm can't create interesting, valuable, relevant innovations without understanding the future, and more than likely there's no one else actively trying to understand what the potential futures look like. 

Like the Matador, you'll be out there on your own.  Unlike the Matador, you probably won't be threatening any sacred cows.  Everyone admires the Matador for the risks they take.  Few firms admire futurists because they often have little stake in the outcomes.  So as a futurist, you are likely to be lonely, and not deeply respected.  That is, until you demonstrate your predictions were reasonably correct, and the ideas you've promoted and opportunities you've predicted, were accurate.

Lincoln and Alan Kay and Peter Drucker have all said, at various times "The best way to predict the future is to create it".  If you can't create the future of your industry or offering, at least have the temerity to try to understand what's next.

Next time:  the Jester.
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posted by Jeffrey Phillips at 6:32 AM 2 comments

Monday, December 27, 2010

What kind of innovator are you?

It struck me recently that far too often we in the innovation space expect our prospects and readers to understand, and comprehend, lingo and language that we toss about relatively carelessly.  I often find myself, when working with clients, having to "define" radical innovation or breakthrough innovation, or introducing topics that I would think are standard in most organizations, like scenario planning.

I decided to try to place innovation and the work that people must do to succeed in metaphors I felt they could understand.  With a hat tip to de Bono's Six Thinking Hats, I want to offer you the X innovation roles.  X because I'm not yet sure how "many" roles there are, and how many each individual will have to play.

Today's innovation role is the Matador.

For those of you familiar with ingrained corporate cultures, we often speak of "sacred cows" that can't be impacted by new ideas.  While that thinking may be coherent from the inside looking out, it completely ignores the fact that outsiders are trying to dislodge your existing products from their niches, or worse, simply create new markets or new needs that make your products uninteresting or obsolete.  You MUST examine innovations that threaten the existing order, product lines and business model, if for no other reason than to know how to defend against the attackers when they decide to attack or maneuver around your products and offerings.

When taking on the sacred cows, you must move carefully, decisively and watch out for the horns.  In other words, you must be a Matador.  Matadors understand how to control a bull, by using the bull's energy and momentum.  Bulls are usually easily enraged and charge heads down, never looking side to side.  A bull's only goal is to remove the threat posed by the new idea.  Bulls are dangerous.  If you as the matador don't understand what the bull's likely response will be, anticipate it and react in time with it, you will be gored.

As an innovator, knowing that you'll have to generate and test ideas that may cannibalize existing products or services means that you need to plan for the likely outcomes.  If you can justify why you need to examine ideas that threaten the status quo, and keep the "bulls" (ie the executives who are threatened by your investigation) aware of what you are doing, you can anticipate their reactions and even guide their thinking - to help them become more aware of potential threats in the marketplace or to create new products and services.  However, you must anticipate the reaction before it happens, and have a plan before the bull is bearing down on you.

If you are doing your job well, you'll have to consider ideas that threaten the status quo.  Otherwise your scope of innovation is too narrow and your firm will be blindsided by new products or services that disrupt the status quo.  Educating the executive team about the rationale for innovating in established areas is much more valuable than either other outcome - waiting for an external disruption or keeping a disruptive idea that threatens the existing products and services under wraps.

Matadors seem graceful in the ring because of the appearance of danger due to the onrushing bull.  Matadors work safely for the most part due to practice, but also due to anticipation and understanding of the actions and behaviors of the bulls.  Innovators must understand the dangers posed by external innovations and internal culture, and decide the best paths to follow before they are confronted by the angry bull.

Next time:  the futurist.
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posted by Jeffrey Phillips at 9:16 AM 2 comments

Tuesday, December 21, 2010

The right timeframes for innovation

As we approach the end of 2010, the concept of time seems to be paramount in my thinking about innovation.  At the end of October I wrote a post about the "right" time for innovation.  Over the last week I've decided that the biggest impediment to innovation isn't funding, or resources, or time, but commitment.  I'm sure somewhere over the 500+ blog posts I've written that contradicts something I've written before, but as they say, a foolish consistency is the hobgoblin of smaller minds...

With that catharsis, I thought it would be interesting to peel back the excuses that we hear about the lack of innovation and what is the "right" timeframe for innovation.  The timeframes we'll consider are:  next quarter, next year, in three years, in the distant future.

Quarter

Far too often on this blog and in most business writing we decry the drum beat of the quarterly report.  The quarter was invented by business people long ago because yearly reports didn't provide enough granularity to what was occurring in the business.  People wanted more insight and information about a business, so quarterly reporting was created.  This is yet another example of unintended consequences.  With quarterly reporting came quarterly achievement - the need to achieve growth quarter on quarter, and to achieve quarterly goals.  What's difficult to accomplish on a yearly basis is exceptionally difficult to accomplish on a quarterly basis.  Businesses have hoist themselves on their own petard, and created a vicious cycle that's difficult to break, because we are now measured on an almost irrelevant time period.  Quarters are forever in a real-time, Bloomberg data driven environment, and quarters are like stopwatches when it comes to measure time to make significant change in an organization.  I was speaking recently with senior members of a large organization which replaced it's CEO.  The listening tour to understand what wasn't working was 90 days - it took that long just to decide what was wrong, and another year to implement the changes. 

While we'd like to work on innovation in this quarter, it simply isn't possible given the need to achieve short term goals.  It would be awesome to get to work on innovation in the next quarter, but doubtful, so innovation is rarely a short term objective, unless it is a very small change that can be implemented quickly.  In the case of the quarter, we are held hostage to a measuring device that is archaic and directs too much management thinking without real results.

Next Year

This is the most common refrain - we didn't budget for an innovation effort in this year's budget, and all the funds are accounted for, so we'll need to plan for innovation in the annual plan and allocate funds, which will allow for innovation next year.  I love this argument.  It assumes that all other competitors and potential disrupters are willing to work to your timeframes.  Since we didn't bother to set aside resources or funds for innovation in 2011, we'll simply have to wait until 2012.  Do you honestly believe that other firms will restrict their innovations based on your funding cycles?  The annual planning cycle is another fiction thrust upon us by financial reporting and the agrarian calendar.  Why don't most businesses create plans with more continuity over a longer period of time?  What's worse, the timeframe from idea to commercialization for many firms is far longer than one year, so commercializing a new idea may have to span several budgeting cycles, each of which is an opportunity to re-prioritize the funding and resources.  All you can really do is start innovating next year, and hope that the benefits will accrue several years down the road.

In Three years

Having an innovation objective three years from now is actually a far more reasonable goal than it might appear.  If a firm starts out with little innovation capability internally and has a typical product development cycle of 18 months to 24 months, then a three year goal for innovation is very realistic.  But when you talk about a three year investment window in this market, that sounds like forever.  To create a consistent investment over that time and wait for any potential returns over that period seems almost impossible.  Realistically, any really interesting and valuable innovation will require this amount of time - for the idea to be generated and evaluated, converted to a new product or service and launch effectively.  A three year window for most firms is almost a concrete requirement, but few firms want to commit to that timeframe or investment.  They would prefer to conduct a few brainstorms to generate some ideas and then see what happens, or use "open" innovation to extract ideas from customers.  What they often fail to realize is that people and funds are required to convert those ideas into new products, which means adding staff or taking people away from other important tasks.  Additionally, it takes time to vet the ideas, convert them into viable products and prepare the market for the new products.  For many firms, three years is actually the best timeframe when thinking about an innovation commitment, but almost impossible to consider given the other constraints.

In the distant future

A major Chinese figure was once asked in the 1960s about his assessment of the French Revolution in the late 18th century.  His response:  too soon to tell.  Our sense of time is out of proportion to what we can understand and accomplish in the given timeframes.  The fact that many firms dismiss the future more than a handful of years out is an indication that we abdicate thinking about and proactively planning for the future, when all the really interesting innovations will occur.

Just two years ago, in 2008, if I had suggested that the US Government would soon own a significant portion of General Motors, many people would have laughed me out of the room.  Now, it's an article of faith that the government saved GM.  Change happens, and actions that we think impossible to conceive will occur in that "distant" future.  Too many firms are so caught up with the short term that they neglect the long term, and fail to invest for innovation or even attempt to understand what will happen.  So they are constantly surprised by market conditions, new product introductions and disruptions that were somewhat predictable.  In a corporate culture where many people hold their roles for 18 to 24 months then move on to another role, it's paramount to accomplish something while in the role, which means that little gets done that can't be accomplished in a year or less.  For many reasons stated here, big innovation can't be accomplished in a year, from idea to product, so innovation is often pushed off to that hazy distant future.

The real answer is that innovation should happen in all of these timeframes.  Incremental innovation should happen continuously, through factors like Six Sigma, lean and suggestion programs.  Firms should build into their plans the goals to implement four to six incremental ideas each quarter, to establish a demand for ideas and demonstrate capability to implement them.

Innovation should be a key component of an annual plan.  If the annual plan is the blueprint for the coming year, and innovation isn't defined, budgeted and resourced, then it won't happen without an emergency.  Adding innovation to the annual plan demonstrates organizational commitment and intention.

Innovation should be planned for outside of the annual plan, to recognize the timeframes that span multiple budgeting years.  The plans should be at least as long as the idea to commercialization cycle, and in most businesses that would suggest at 3 year innovation planning horizon at a minimum.

Finally, any business that expects to compete and grow in the future needs an active program to understand what will happen in the "distant" future - those dimly viewed years more than three years from today.  Trend spotting and scenario planning can help shape your view of that time, and help the organization understand how to act on a proactive basis to attack emerging opportunities.

The right timeframe for innovation

The right timeframe for innovation is:  next quarter, next year, in three years, and in the "out" years, and I've attempted here to define what your firm can, and should, be doing in each of those timeframes.  Don't let the excuses pile up - start executing innovation work in each timeframe, and doing the work that aligns to each timeframe.
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posted by Jeffrey Phillips at 7:11 AM 2 comments

Monday, December 20, 2010

Four Innovation Predictions for 2011

For those of you who receive our newsletter, these predictions are the same ones we made in our December 2010 edition.  For those who don't know about the newsletter or our yearly predictions about innovation, please read ahead.

Keeping with the publishing traditions that demand that most articles in December relate to a "top ten" list from the year just past or predictions about the near future, each year we boldly stake out several predictions about the future of innovation.  Each year we also recap the predictions we got right, and wrong, from the previous year.  For 2011, we're making the following predictions about innovation:
  1. Ideas come from everywhere - "open" innovation is ubiquitous
  2. Experience is more important than product - the outcomes change from new products to new experiences
  3. Timeframes shorten - while organizations are getting better at generating ideas, the timeframe from idea to commercialization hasn't changed.
  4. Creativity re-enters the workforce.
Let's look at each of these in turn and describe why we think they'll occur and why they matter.

Ideas from Everywhere

In case you haven't been following along, this trend is already underway and will reach its zenith in 2011.  Open innovation - receiving ideas and developing ideas with partners and customers - is already a powerful force in the innovation space, and will become even more so.  Whether "open" innovation means receiving ideas from customers, co-creating, crowdsourcing, technology transfer or any of the many definitions or labels we apply, firms are interested in gaining more ideas from more people.  There are benefits and risks associated with this.  The benefits are that the firm has a much broader portfolio of ideas and sources.  No longer is the firm limited to ideas that can be generated internally.  The risks are that the firm fails to deliver new products based on these new ideas.  There is an inherent contract with your customers and partners - ask us for ideas, fine, but be sure to deliver something new.

One reason that Open Innovation will reach its zenith this year is that many firms will recognize that Open Innovation, for the most part, is about generating ideas.  If the evaluation, selection and product development capabilities aren't improved, receiving more ideas that you can't convert into new products and services isn't important.  In 2011, we'll see even more emphasis on open innovation, and we'll also see a growing recognition that while open innovation is important, it doesn't solve many internal barriers to innovation (see "Tick-Tock" below)

Experience over Product

Traditionally, innovation has been focused on new products.  We typically measure innovation by the investment in R&D or patents generated.  The examples we use are things like the iPod - physical, tangible products.  But innovation can result in a broad range of outcomes - products, services, channels, business models and experiences.  Our prediction is that in 2011, experiences become more important than products.  Here's why:  first, people will continue to purchase cautiously.  They need to know their money is spent wisely.  Therefore, fewer products will be purchased and they'll have more meaning.  The experience around the product purchased will matter more than it did previously.  Second, experience is more difficult to copy or duplicate than product.  There are thousands of MP-3 players, but only one iPod.  That's not because of the technology, but because the experience is truly different.  Third, people will shift from a consumption economy to one where they demand more "meaning" from the products they buy and the firms they buy from.  Look no further than Subaru's campaign to contribute to causes.  In 2011 and beyond, firms that understand that experience is important and start innovating around experiences will be more successful.

Tick-Tock

Many firms have done a good job of improving their ability to generate and manage ideas.  However, they remain stuck with the existing product development processes, which actively hinder commercialization of ideas.  The time from idea to commercial launch is actually increasing in many firms, and there are fewer resources to do the work and many competing priorities.  As competition increases and product life cycles shorten, firms have to do a better job of getting their best ideas to market quickly.

In 2011, many firms will seek ideas to shorten the product or service development lifecycle, to get their best ideas to market faster.  This will mean improving internal processes and capabilities, or partnering with third parties to bring the new products to market, while internal teams manage legacy products.  There is an analogy for this in IT - typically new software is designed and implemented by third party consultants, while the IT team manages legacy applications.  We'd prefer to see both capabilities housed internally, but the coming years may be very good for consulting firms that can speed the commercialization process.

Creativity Revived

As firms and organizations realize they must compete not simply on cutting costs but also on their new ideas, creativity will find a new, welcome role in larger organizations.  I've just heard about new training proposed in a state government to teach government managers and executives to think more creatively.  Can't wait to see that training curriculum, but it's a symptom of a much larger need.  Over the past decade, most businesses have cut and downsized to the point of optimum efficiency and focused "like a laser" on become effective.  Now the need to generate new ideas is paramount, but those people and skills are gone. 

Firms in 2011 will need help creating new ideas, and will do that by training their staff and hiring consultants to help them add more creativity and new ideas.

That's what we believe will happen in 2011.  Please contact us to let us know what you think we got right - and what we missed.

Here's to an innovative 2011.
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posted by Jeffrey Phillips at 8:27 AM 4 comments

Thursday, December 16, 2010

What's remarkable about innovation

Like many of you I participate in the social media world.  That world has opened up new relationships and new sources of information for me that were completely unexpected.  I've learned a lot from individuals on Twitter and Facebook and Linkedin, and I've become a real believer in the use of social media to support innovation.

I was following a Tweet chat recently led by Boris Pluskowski in his new role at Spigit.  Boris was interviewing the head of Allstate's innovation program, who was talking about how the folks at Allstate deployed their innovation capabilities.  Boris did a great job, and along with a number of folks on Twitter, commented on the factors that helped Allstate succeed at innovation.  What was remarkable about the commentary was how unremarkable it is.  This is not to say that Boris or the other folks who were Tweeting weren't creating insights.  No, the information they were providing is rock solid and valuable.  What's remarkable and distressing to someone who wants innovation to succeed broadly is that most of the factors really aren't that interesting or remarkable. What is remarkable about most innovation successes isn't that they have good practices, which if you follow the Twitter stream will seem fairly obvious, but that it takes passion, and vision, and intestinal fortitude to get these rather unremarkable things done in a business.  And that's why innovation seems one the one hand so obvious, and on the other hand so difficult.

Let's go, as they say, to the Twitter stream for some examples.  You can find much of this by searching on the hashtag #spigitwebinar.

What were some of the success factors: (The bullets are direct quotes from the Twitter stream)

  • They wanted to engage people in the org in the Innovation process - and their playful room was a starting point
  • On-you-own-time experimentation - project to encourage and enable people to work on innovative ideas on their own time  
  • Allstate set up a lab for employee innovation. Originally post-it notes on a wall. Then wiki. Now a collaborative idea site.
  • Allstate gets most of its value from targetted blitzes
  •   Everything is transparent...We want employees to have a voice in the innovation process
  • Not all great ideas come from the exec office. Wanted to tap into the power and passion [from employees all over the world
  • We need to fail affordably, we need to fail quickly, we don't need to fail spectacularly
  • Key aspect of Allstate's most successful employee ideation blitzes? Senior leadership sponsorship
       
  •  
If you follow innovation at all, most, if not all of these quotes are reasonable and mundane.  Allow people to fail and learn from failure, get senior executives involved and committed, tap the entire employee base for ideas, find a "place" for people to innovate and think differently, use targeted campaigns.  For innovators, this is the truth - but the mundane truth.  Again - not beating up on Boris or anyone else leading the discussion, but this is preaching to the choir.

The real question is - if this is so mundane, why is it so difficult to do well in many firms.  None of these actions is very distinctive or difficult, and none requires a significant investment or differentiated skills, so why is it so difficult to get them done?  Why is it still the case that much innovation is based on individual acts of heroism in many firms, rather than on a consistent innovation capability?  

To me, that's what's remarkable about innovation.  It's a task that anyone could do, given the time and resources, but one that only a few people actually do, often in opposition to the corporate culture, yet the outcomes are ones that everyone wants.
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posted by Jeffrey Phillips at 6:41 AM 5 comments

Tuesday, December 14, 2010

Innovation and Strategic Alignment

In a new study on innovation just released by CapGemini, one chart in particular caught my eye.  The chart is a stacked bar chart reflecting how aligned the executives believe their innovation work is with their strategic goals.  You can register for the report at www.capgemini.com.

The background material on the study indicates that CapGemini received 189 responses from companies in 15 countries, and that most of the respondents were board-level and senior executives, as well as middle managers closely aligned to innovation roles.  So these folks should understand their corporate strategies and how closely innovation is linked, or should be linked, to strategy.

What caught my eye is that across four major industry divisions - auto/aerospace/defense, Industrial Products, High Tech and Consumer Packaged goods and Retail - anywhere from 23% to 50% said they felt innovation was "somewhat aligned" or not aligned.  As you'd expect CPG was the "best" of the group at 23% somewhat or not aligned, and Auto/Aerospace/Defense was the worst at 50% somewhat or not aligned.

This report should be given to all the CEOs and C-level officers of the firms that responded, and should then cause innovation efforts in many of those firms to come to a screeching halt.  If anywhere from 25% to 50% of your company's time and effort is being spent - in any initiative - on tasks that don't fully align with the corporate strategies, you should be concerned.  When significant innovation initiatives don't align to corporate strategies, you should be, in the immortal phase from Network "mad as hell and not going to take it".

What was even more shocking was that in most industries 10% or less of the executives responded that innovation was "completely" aligned to corporate strategy.  In what other business effort or function could you achieve any success only 10% aligned to corporate goals?  What on earth are these innovators doing?  There are really only a few possibilities:

  1. Corporate strategy isn't well communicated or is unclear.  Believe it or not this is more prevalent than you'd want to think
  2. Innovators are "off the reservation" chasing ideas that don't align to corporate strategies.  These teams need to be corralled and directed to important corporate goals
  3. Corporate strategy is clear but the goals and outcomes expected from innovation aren't clear.  Yes, we want new products - but should those products be incremental or disruptive?  Should we rely on internal innovation capabilities or extend our innovation externally?
  4. Innovation is intentionally disruptive and appears to run counter to corporate strategy.  All companies should have some innovation that either considers cannibalization of existing products or entry into new markets or spaces, and that may seem to run counter to corporate strategy but in effect is actually very tightly aligned.
Only the last reason is even close to acceptable if innovation efforts and strategic goals aren't in close alignment.  The first three are symptomatic of bigger problems not necessarily related to innovation, but to management, strategic thinking, culture and communication.

How long will it take before senior executives recognize they have an important role to play in setting expectations and goals for innovation, and ensuring those efforts are "on track"?
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posted by Jeffrey Phillips at 11:22 AM 4 comments

Wednesday, December 08, 2010

Fear, Uncertainty and Doubt as barriers to innovation

If you came of age during the great technology marketing wars of the 80s and 90s, you'll recognize the acronym "FUD" - fear, uncertainty and doubt.  Marketing's goal in most cases was to create enough fear, uncertainty and doubt about a competitor's products or services that the buyer remained loyal to his or her incumbent.  IBM has been credited with making FUD a sales and marketing tactic, as in the statement "No one ever got fired for hiring IBM to do a job". 

Basically FUD argues that what's known and experienced should have more weight in a decision process than what's new or unknown.  It argues that consistency in decision making and loyalty to the status quo are more valuable and more defensible than change.  The problem with this line of thinking is that change occurs all around us, and remaining true to a vision, whether that's our vision or a vendor's vision, risks missing valuable information.  FUD has been, and will remain, a valuable marketing tactic whenever there are gray areas about decision making.

Unfortunately FUD has permeated the way many executives make decisions about anything, and that attitude has permeated most organizations.  If you could boil down all the arguments about innovation, for example, you'd find that most of the barriers could be reduced to fear, uncertainty and doubt.  Let's look at why these three factors are barriers and what your firm can do to change them.

Fear

Why are we afraid of innovation?  Clearly, when done well innovation offers the promise of valuable new products and services that drive growth and profits.  But innovation isn't a given - we can't promise that a new product or service will return what we hope it will return.  And, since existing business processes and products seem relatively predictable, we allow our fear of change and risk to limit our innovation investments.  Even when firms do attempt to innovate, they tweak the ideas to make them "safer" and easier to implement, but often with less reward. 

Fear is a cultural phenomenon, brought on by the fact that one significant failure in a career is all you get.  Most people understand that mediocrity is typically rewarded, but taking significant risks for big gains is fine as long as you succeed.  We need to re-introduce to many cultures the concept of taking more risk for greater reward.  As competition increases and global trade barriers fall, doing the same things and expecting even the same results is insanity.

Uncertainty

To work in many large organizations today, you almost have to be a zen master to decode what's said, and what's meant.  I think many executives are intentionally vague in their statements so that if a project is implemented and unsuccessful, they can point the blame somewhere else.  When strategies and goals are uncertain, people do what they know best - maintain the status quo.  To improve innovation outcomes and investments, we must eliminate uncertainty.

You can't eliminate the uncertainty that surrounds whether or not a new product or service will be successful.  The market drives that.  But you can eliminate the uncertainty about the value of innovation, or who should be innovating, or what kinds of innovation would be valuable in your organization.  Good strategic direction and consistent communication from executives in all levels will go a long way to reducing uncertainty.

Doubt

Doubt is created when there is Fear, as described above, or when uncertainty exists, as described above, or when people don't know the answers and aren't willing to ask.  Doubt arises when executives and leaders aren't able or willing to provide leadership.  In the absence of good leadership, people begin to doubt their own judgments and will, again, revert to the status quo.  It's amazing how easy it is to create doubt in an organization, and how difficult doubt is to overcome.

To overcome doubt, we need forceful, direct leadership, consistently communicating and in the forefront of the innovation effort.  Not a disinterested bystander but an active participant.  Generals for many centuries led from the front, to demonstrate what they wanted from their troops.  We need more leadership from the front where innovation is concerned to dispel doubt.

Fear, uncertainty and doubt were tools used by marketers to remain an incumbent.  Unfortunately these attributes have infiltrated the way many organizations manage their work and their teams.  While FUD is great at maintaining a status quo environment, a circle the wagons mentality can't create new, valuable products and services.  What we need is a new mantra - Unafraid (rather than fear), Certainty and Leadership.  While LUC doesn't have quite the same ring as FUD, hopefully some of firms will start to embrace LUC and implement its concepts to embrace innovation.
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posted by Jeffrey Phillips at 6:01 AM 2 comments

Tuesday, December 07, 2010

Why customer experience innovation matters now

This is the time of year when analysts and consultants make predictions about the upcoming year. The folks at Trendwatching.com have just released their top 11 consumer trends for 2011.  Almost seems like a Spinal Tap moment.  Anyway, we at OVO are no exception.  Each year we publish predictions based on what we believe will happen in the upcoming year.  You can register for the email newsletter here.  In this blog post I'm going to explore one trend we think will be important, and why you should be acting now.

As you may have guessed from the title of the blog post, we believe customer experience innovation is one of the most compelling opportunities in 2011.  This is based on a number of market conditions, trends and innovation needs.  First, as anyone paying attention to the economy can tell you, consumer spending is down as people pay off their mortgages, credit cards and other debt.  That doesn't mean that people won't spend, just that each purchase matters a little more than it did before.  Therefore, firms that improve the customer experience, not just in purchasing but in all aspects of the customer's engagement with your product, service or company will benefit.  Increasingly, people are seeking more than a purchase.  They are seeking a relationship with a brand or a company and expect to be engaged and rewarded by the relationship.

Beyond what customers want, however, is what firms can create effectively and with lower costs.  New product innovation is risky and expensive.  The vast majority of new products that reach the market fail to return the investments made to create them.  In this current market, few new big bets are going to be made on new products or services.  But experiences - how we interact with a customer or a consumer, in all channels and touchpoints - that can be done with far less risk and less cost.  Innovation around a customer experience is less risky and has less cost associated with it.  Therefore it will be easier to implement in this economic environment.  So we have a coming alignment - consumers seeking more engagement and "meaning" in their relationships and acquisitions while firms seek to sustain innovation with lower costs and less risk.

There's a reason customer experience innovation isn't more ubiquitous, however, and that's because while it's not expensive to accomplish, it's not easy to accomplish.  Customer experience innovation requires understanding what customers value in the "touchpoints" and interactions with your products, services and your firm, and placing the right investments on the most important and valuable touchpoints.  Customer experience needs to consider each "channel" a customer may use to interact with your firm:  retail locations, telephone, web, email, direct mail, advertising, etc.  The total customer experience cuts across a number of vertical silos within many organizations, including sales, marketing, products and customer support and service.

Note that you don't have to be perfect in all situations and in all channels, and you don't have to do everything internally.  Your customers and clients will work with you to identify weaknesses in customer experience if you are genuine in your intent to improve their experience and let them help you improve those touchpoints.

Innovation matters, but right now and in the near future innovation focused on improving customer experience matters more.  The combination of reduced spending on the customer side, compounded by a reduction in conspicuous consumption and an improved sense of meaning and relationship, and a need for innovation on the business side while holding costs low, means that customer experience innovation sits in the sweet spot of those two intersecting sets.  Start placing your bets now, because customer experience innovation should be in high demand in 2011.

If you are interested in customer experience innovation, need help or want more information on tools or techniques, contact us to learn more.
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posted by Jeffrey Phillips at 7:00 AM 5 comments

Monday, December 06, 2010

The failure of managing radical ideas within existing processes

I've struggled for years to understand why innovation is often stymied by what appears to be poor communication, until a recent incident demonstrated why innovation is so difficult.  It's not just that we need new ideas and the ability to translate ideas into new capabilities, we often need new methods to bring those ideas to reality.  And that becomes the crux of the problem.

Recently I was working with a client, creating new ideas to radically transform a portion of their business.  The executive sponsor was exceptionally happy with our work, and the small team we had pulled together was enthusiastic about the ideas and eager to continue the next steps.  To do so meant bringing in a larger team.  Just before we did so, I asked the executive sponsor to speak with the new members, to convey how important these ideas were and how urgent it is to implement the ideas quickly, and he did so.  That, I felt, checked the box we always focus on called "communication".

To my surprise in the first meeting with the expanded team, the new folks were already talking about how the ideas should be implemented, and how quickly they could be implemented, and how the ideas could be adjusted to fit existing programs and processes.  It was a complete disconnect.  We adjourned the first meeting rather quickly, because we discovered that what the new folks had heard was that they should create a quick success with the new ideas, and they interpreted that to mean that they should use existing processes and methods.  What was communicated, and what was heard, were two radically different things.

The new folks on the team assumed that while the ideas were radical, they could be aligned and softened to work within existing frameworks, projects and processes.  They had already discussed how to change the ideas so that they would fit within some existing project parameters, without realizing that the reason the ideas were so different was that they sought to create an entirely different value proposition.  I realized later that I had failed the senior executive sponsoring the project.  He didn't need to communicate just the value of the ideas and his goals for implementation - he also needed to communicate the fact that the ideas should change as little as possible, and the existing frameworks and processes should change to adapt to the ideas, rather than changing the ideas to adapt to existing processes and thinking.  It wasn't enough to have very compelling ideas that we tried to implement quickly - we also had to implement new methods or processes since trying to force the ideas through existing corporate frameworks and processes meant they would have to be watered down.

This is a classic case of hearing what correct but incomplete communication.  What the new folks on the team heard and interpreted was:  implement these interesting ideas as quickly as possible.  They interpreted that to mean:  do so within the existing processes, frameworks and approval programs that exist today.  What the executive meant was:  implement these ideas as quickly as possible, as close to the form they have now as possible, and rework the existing processes or invent new ones if necessary.

There are at least two good learnings to take away from this:

  1. What we consider good communication is often incomplete communication.  Innovation requires good, timely and complete communication, leaving nothing to be assumed or interpreted.  Whether that is the scope of the effort, the range of ideas desired, the timeframe of the effort or how the ideas should be evaluated and commercialized, everything should be communicated effectively.  And the comprehension of the communication should be demonstrated as well.
  2. People are creatures of habit.  Even when confronted with approved, interesting ideas, most people will revert to existing processes and methods to develop and implement the ideas, or will try to fit the ideas into existing projects or initiatives.  This almost always results in watered down ideas that didn't seem worth the trouble.
Innovation needs more than new, dramatic goals.  Clearly the ideas you generate must create significant change to your clients or customers.  But probably just as importantly, ideas once generated often need new methods and processes to become the great new products and services they were meant to be.  Forcing radical new ideas through existing "business as usual" processes will result in dissatisfaction far too often.
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posted by Jeffrey Phillips at 5:58 AM 5 comments

Wednesday, December 01, 2010

Why calendars are the real barrier to innovation

While this post is slightly tongue in cheek, I wanted to explore with you, my gentle readers, one of the most insidious barriers to innovation, the lowly calendar.  While other challenges to innovation may appear more robust, it is actually the calendar that has the most subtle power.

First, consider the power of the calendar on the way most business people think about results.  In any publicly traded company, our time yardsticks are 90 days and one year.  Ninety days is the duration of a quarter, when businesses report their increases or decreases in their business.  In any business of any significant size, very little can actually get accomplished in a quarter, but that's the reporting timeframe we are stuck with.  The quarterly reporting timeframe means that few things that will impact costs or revenue in a quarter will be worked on aggressively in that quarter.  The yearly or annual report is another yardstick which seems too short and outdated as well, but we persist in its use.  What I find interesting is that many businesses start planning for the upcoming year six months before the year starts.  Many businesses spend almost half of the measurement period planning for the period.  And we wonder why it is so hard to get innovation done. These calendar items distract from interesting innovation work at best and at worst encourage managers and executives to ignore innovation, since it is difficult to achieve results in either of these time periods that will impact the top line or bottom line.

Another tyranny of the calendar is simply attempting to schedule meetings and events with an innovation team.  Most innovation teams include many people who have "day jobs" and the attempts to schedule time to discuss trends, or generate ideas, or interact with customer panels is almost impossible.  Everyone in business today is overscheduled, and every item on the calendar seems of dire importance.  I had a client recently tell us that the innovation project we were working on was of the utmost importance, yet we couldn't schedule a meeting of the innovation team for almost six weeks due to scheduling conflicts.  What's more important, innovation or the calendar?

Calendars present another barrier to innovation in that many firms still operate on a "calendar" year, starting their business year in January and ending it in December.  This means that not much gets done in January as the year kicks off, then there is a flurry of activity to get things done by the end of March, which is the end of the first quarter, so innovation in the first quarter is difficult without momentum coming out of the previous year.  Then, in a period seemingly ripe for innovation, the rush is to get something started before the mass vacations start in the summer.  Forget about kicking off big projects in July and August.  That leaves September and then planning season really kicks in until the fall holidays, when everyone is trying to wrap up the year and eat up all their unused vacation time. 

Finally, one more reason why calendars are insidious for innovation efforts.  Businesses plan and budget expenditures on a calendar basis, often setting spending plans in September or October for the following year, with limited flexibility on changes in spending for the next year.  Innovation projects face two conundrums based on that budgeting.  One, good ideas may occur out of sequence with the annual budget, meaning that while we generate good ideas we may not have the funds allocated to implement them in this year.  Second, many innovation projects can span more than one year, meaning that the program has to be funded in two annual cycles.  In firms where the average product development cycle is 18 months to two years, an idea may be part of two, or even three annual planning cycles, each one an opportunity for the idea to be defunded.

Clearly, the best time to have started an innovation project is "last quarter".  We innovators need to recognize and ensure our executives recognize that innovations aren't governed by a fixed calendar, and that busy calendars get in the way of doing good innovation work.  The calendar has become a barrier for our work rather than a tool to assist our work, and we need to put the calendar back in its rightful place.
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posted by Jeffrey Phillips at 5:45 AM 5 comments